Sunday, July 26, 2009

Rundown on Mainstreet

REDWOOD CITY, Calif. – As the effects of the economic collapse began pouring down Main Street, the government last year was left holding a record $2.1 billion in write-offs of small business loans it had guaranteed. Officials expect the number of defaults to rise as the nation continues to climb out of the recession.

Records obtained under the federal Freedom of Information Act show the public is paying to offset bank losses on small business loans across the country, from a convenience store in the tiny Canadian border town of Houlton, Maine, to a graphic arts design company on the island of Hawaii, more than 5,000 miles away.

Despite having loans written off, little companies such as Caffe Sportivo, an espresso shop and small gym in Redwood City, Calif., are barely scraping by.

"I just couldn't make any payments. I was barely making rent or payroll," owner Chris Sakelarios said on a recent afternoon when her cafe stood empty except for two patrons who read as they sipped coffee. "The same as everyone else. We're in a hovering pattern."

It's a sign that even as record profits re-emerge on Wall Street, thanks to massive government loans and guarantees for banks deemed too big to fail, the pain on Main Street is as profound as it's been in half a century. The companies that were not too big to fail are failing.

Their plight is a shift from previous recessions when small business bounced back ahead of big employers, said Todd McCracken, president of the lobby group National Small Business Association.

"This could be the first economic recovery we've seen in a long time that hits small business the hardest the longest," he said.

The Small Business Administration purchased $2.1 billion in bad loans from lenders last year. Agency officials say it's likely that this year will see another high as the recession nears the two-year mark.

"It's frustrating when (banks) are getting bailed out for bad decisions they made, that there isn't more assistance for the small business," said Eric Geedey, who manages Caffe Sportivo for Sakelarios.

Sakelarios obtained a $20,000 SBA loan from Union Bank in late 2007 to start her business when the economic outlook was brighter on the affluent San Francisco Peninsula. Within a year, however, she was scraping by with the help of a landlord and vendors who let her adjust payments. She has reduced the hours of her seven employees and relies on her brother and a friend to help keep the doors open on weekends. The balance of the loan was written off in early January.

In addition to being dogged by bad credit, the cafe will have to report the loan charge-off as taxable income, Geedey said.

Sakelarios isn't the only recession victim and she won't be the last.

SBA loan defaults generally occur in two stages. The first is when the bank decides it won't get its money back and asks the government for the guaranteed portion of the loan. In the second, the government decides it won't get any more collateral or money from the borrower.

Years can elapse between the time that the borrower stops paying and the government writes off the loan.

In 2008, for example, the government concluded it wouldn't be able to recover $1.3 billion in defaulted bank loans it had guaranteed. Many loans were part of a backlog, according to SBA officials.

But an AP analysis found that the time between loan approvals and loan defaults is narrowing. According to the analysis:

_More than $235 million in restaurant loans have been charged off since 2007. The 2,586 restaurant charge-offs make up the largest number of defaulted loans, according to the SBA. More than 150 loans made to Quiznos franchises — worth nearly $15.5 million — have been written off since 2007.

_The Gulf Coast fishing industry, battered by two major hurricanes in 2005, has been hit especially hard. Half of the 10 cities with the highest industry-specific write-offs are in Biloxi, Miss.; New Orleans; Ocean Springs, Miss.; Lafayette, La.; and Abbeville, La. All told, the shellfish fishing industry had 45 loans charged off, at a total cost of $19.5 million.

_The banks making the loans have also been hit hard by the recession. Bank of America Corp., which has received $52.5 billion in government aid, has had nearly 7,000 loans worth $238 million charged off since 2007. More than 660 loans worth $174 million have been charged off by CIT Group Inc., a major commercial lender forced to turn to bondholders in an effort to try to avoid bankruptcy protection after the government refused to save the company.

"I have never seen it as rough as it is right now," said Scott Hauge, president of Small Business California, a business advocacy group.

Small businesses account for half of all private-sector workers and have created roughly half of the nation's jobs over the past decade. They received some help from the $787 billion federal stimulus package in February, including higher microlending amounts and federal loan guarantees. Congress also authorized the U.S. Treasury to purchase $15 billion in pooled loans to encourage lenders to provide money to small companies. The SBA recently announced it will guarantee short-term bank loans to help small businesses pay off existing bills.

The White House has floated a proposal to take money from a $700 billion bailout of the financial system and provide small companies with working capital, allowing them to add inventory and employees. If it happens, the White House said, help might arrive by fall.

That's too late for thousands of defunct companies with shuttered windows, disconnected phones and broken dreams.

Diego Garcia's soccer supply store in the modest Northern California city of Richmond has shrunk to one small location after Garcia was forced to close his two larger stores last year. Garcia started the business after launching a youth program and soccer league in gang-ridden Richmond. He had turned away from his own gang lifestyle after being shot in the chest at age 18.

Garcia expanded fast, never imagining how quickly his booming business would decline. When he couldn't pay up, his bank wrote off nearly all of his $45,000 loan. He lost rental property to foreclosure at the same time.

"It's too much of a loss," he said. "We had to get loans to get bigger. Then everything went the opposite way."

Eric Zarnikow, SBA's associate administrator for capital access, said the bad numbers probably will continue to rise as the agency receives charged-off loans in the future from defaults occurring now.

84 comments:

People around the whirled are desperately searching for "green shoots." I believe that psychology plays a part in mankinds' economic peaks and valleys. Fear and pessimism, optimism and hope play a part with supply and demand.

Northeast Phoenix is swiftly gaining a reputation as one of the Valley's best for used-furniture shopping.

Several businesses line Bell Road east of 28th Street. Meanwhile, a large outlet a mile south at Greenway Road likewise offers used furnishings to the public. The stores make up one of the focal points of a new initiative along Bell Road between Cave Creek Road and 32nd Street.

There, with the support of the city, the merchants are looking to upgrade the image, appearance and marketing of the street, and the furniture businesses will be a key component of the effort.

The businesses are not antique dealers, nor are they junk shops. Their prices may be heavily discounted, but the selection may well be better quality than larger retailers.

The economy has been tough on some used-furniture stores. At least two used-furniture businesses in the area recently shuttered.

Most of the "smartest people in the world" (eg the traders at Goldman, and Morgan Stanley) think we'll never, again, see 86 million bbl/day of liquids.

Now, admittedly, the record of the SPITW hasn't been, exactly, Stellar, recently; but, since they still have the bulk of the money, they're making the trade.

Their thinking is that as soon as we come out of recession there won't be enough oil to go around.

It seems logical. They know how much there is, and they know how much is coming on-line. They, also, know that the only country in the world that has any "spare capacity" is Saudi Arabia; and the Saudi supplies are tightly controlled by, actually, one man. And, that "one man," the King of Saudi Arabia, is not, exactly, strapped for cash.

He can afford to leave some in the ground until the price improves. As a result of all this, Morgan, and Goldman, and the boyz are "managing" the supply by buying any "excess" and storing it in oil tankers that aren't, at present, needed due to the lowered demand.

About the only thing that could screw up their plans is if they drive the price too high, too quickly, and prevent us from coming out of recession, thus causing the price of oil to plummet, again.

In either case, it sucks to be us. We'll either get a weak recovery with high oil prices, or no recovery at all. Welcome to the dominant theme of the early 21st century.

The oil markets have been in "Contango" (higher price the farther out you go) for quite some time, now. That means Morgan can buy a load of oil at today's price, pay a dollar/mo for the tanker, and be guaranteed a profit if they book the oil on the NYMEX futures market.

MANY of our vendors have shortened our credit lines and the repayment schedules

Even though we are hitting almost last years numbers, profits are squeezed and it's taking almost my entire genius to stay alive...

I think we will be (personally) fine, it's getting worse out there..

That invisible destructive force has swept the country, destroying businesses. Now to be blunt, a lot of businesses in the last 18 years got by by smoke and mirrors and stupid money...

those days are gone and within a 6 month period market excesses were wiped out...

now the "to big to fail" syndrome has extended some of these smoke and mirror companies...

add into that the obamacare & "cap and trade" concepts (that china, germany and india reject) and we are setting our selves up for a hugh failure...

on the bright side?

100,000's of thousands (if not millions) of people around the globe will be killed by regional warfare that will commence once the world understands the NEW obama led diminished nation called the USA

Now under the new flag of being humble, America will no longer help those around the globe be free..

screw em...

That's the new foreign policy...

American dhimminess...

No longer will America try to advance freedom and human rights across the globe....

screw em

This is why Obamamessiah will talk about having a beer to sooth american racism WITHIN, while fighting for the rights of moslem women INSIDE america to wear the burka, while ignoring the idea of moslem women in the moslem world having the right NOT to cover their heads...

I dug around an found the article where the guy poo poo'd the oil filled tanker idea. He doesn't offer any backing for it but the whole article would probably be of interest to you and, at first glance, does seem to agree with much of what you've said.

"hat would be Henry Groppe, 83, who has been tracking the complex world of oil and gas production, consumption and pricing for more than half a century.

“I feel like I'm from Mars, because I know all the stuff that's put out there has no basis in reality,” says Mr. Groppe, who in fact hails from Houston. “Most perceptions of what's actually happened are totally wrong, because there are such errors with the energy statistics.”

The reason most numbers are wrong – including those used by the International Energy Agency – is that no one in the industry has any incentive to provide accurate statistics, Mr. Groppe said during a visit to the Toronto offices of fund manager Middlefield Capital Corp., which he serves as an adviser. “So nobody really knows how much oil is being used in the world today.”

Mr. Groppe and his associates spent years laboriously developing their own data to paint a reliable picture of oil flows. Relying heavily on oil import figures (which are more accurate than exports, because governments collect taxes on them), among other sources, they know who is shipping what to where and in what quantities.

Their findings: Actual imports have been as much as 1.25 million to two million barrels a day less than was claimed to have been exported in official stats.

Ignoring unreliable weekly inventory numbers and dismissing claims of oil-filled tankers sitting idle in the Caribbean as largely fanciful, he has concluded that much of what has transpired in the past two-and-a-half years “can be traced to specific changes to the supply-demand balance.”

During this period, prices soared from an average of $54 to a brief peak of $147.50 a year ago, and then plunged to $34 last December before coming back to the current level. Speculators climbed on the bandwagon, making the peak higher and the valley lower, but they didn't influence the direction, he said.

If policy makers want to hold anyone responsible, it ought to be the Saudis, who overreacted to fears of a global collapse by slashing production last summer and keeping it down ever since, says Mr. Groppe. "

The Research Triangle Park, N.C.-based nonprofit said Monday that it has found that medical expenditures attributable to obesity have doubled in less than a decade – to as high as $147 billion per year.

Between 1998 and 2006, the prevalence of obesity – which is a body mass index greater than 30 – increased by 37 percent, RTI said in a written statement about the study. The condition now is responsible for 9.1 percent of annual medical expenditures, compared with 6.5 percent in 1998.

The results also showed that an obese person has $1,429 per year more medical costs, or about 42 percent more, than someone of normal weight. Costs for an obese Medicare recipient are even greater.

The report, which was funded by the CDC Foundation, was based on data from the 1998 and 2006 Medical Expenditure Panel Surveys.

Add $125 per month directly to their FICA tax, as the fattie penalty premium payment.

Rat, those hoarders can not "corner" the market (there are several reasons why this is so,) BUT they Can "Affect" the market.

Ash, I have respect for this old man, however, like ALL oil traders, he's, primarily, "talking his book." He does, on the other hand, make a valid point as regards "Imports," vs "Exports."

Our "stated" reasons are different, but we're Saying the same thing. "Prices will Go UP, then they'll drop, Then they'll Go UP."

He rationalizes that Saudi Arabia will overreact. I'm saying the high prices will put us back into recession. In both cases prices will drop. Then, they'll start to Rise, again.

This is the first time we haven't had another large supplier sitting in the wings ready to "take up the slack." First, we had the North Sea. Then, we had Russia, and most recently, Angola, Kazakhstan, and Azerbaijan.

Today, we've got bumpkus. And, forget Brazil. It will never produce too much, and right now they're busy drilling "Dry Holes" (at $150 Million a pop.)

Most people think Saudi Arabia "peaked" in 2005. Some people think The Kingmaker, Ghawar (the largest field in the history of the World) will be, essentially, watered out by the end of 2010.

Upwards of 2,000 Israeli were protesting, telling our envoys that they should leave Israel and that our President was a racist, to boot.

A link on that story page led me to this fine intellectual addition to any World Net Daily reader's library.

The Late Great State Of Israel - (Autographed) (Hardcover) By: Aaron Klein

Israel is dying. And those responsible are not just the terrorists plotting its destruction, but also the political elites within its borders. Drawing on in-the-field reporting and research that has brought him to the front lines of the Middle East news cycle, acclaimed journalist Aaron Klein spells out the shocking truth.

In this groundbreaking work, Klein will show how Israel is often its own worst enemy. And how Hamas, Iran and Palestinian terrorists are poised to end the democracy once and for all. Unless these perils are countered soon, warns Klein, the only remnant of the Jewish country may soon be an epitaph: "The Late, Great State of Israel."

NOTE: Purchasing "The Late Great State Of Israel" from WND's online store also qualifies you to receive three FREE issues of WND's acclaimed monthly print magazine, Whistleblower. Watch for the FREE offer during checkout.

Defense Minister Ehud Barak, who had made gestures from the Arab world a quid pro quo for any type of construction freeze in the settlements and - according to some reports - for removing settlement outposts, met Mitchell when he arrived on Sunday.

Israeli sources said that progress has been made regarding the settlement issue, and that there was now a willingness on both sides to reach some kind of understanding. There is much speculation that the understandings will revolve around an Israeli agreement not to start any new construction in the settlements for a set period of time, in return for being allowed to finish the some 2,500 units currently under construction.

Mitchell is scheduled to meet with Netanyahu on Tuesday. While Israeli officials said that it was unlikely the settlement issue would be settled on this visit, Washington - according to the sources - would like to resolve it before the August 4 Fatah convention, in order to give Abbas some "achievement" to point to at that parley.

"Washington was doing everything it could to achieve a comprehensive peace ... between Israelis and Palestinians, between Syria and the Israelis, between Israel and Lebanon and the normalization of relations between Israel and all of the countries in the region," Mitchell told reporters.

The envoy said Obama wanted "an early return to meaningful negotiations and a prompt resolution of those negotiations." He added, "That means that everyone must take steps, some of them difficult, some of them controversial to create the context ..."

Mitchell has told Abbas that Obama is committed to the peace process, and is 'determined and consistent' about it. Mitchell is due to see the Israeli Prime Minister Benjamin Netanyahu on Tuesday.

Investors also picked up stocks of companies which posted better-than- expected earnings or forecasts, such as Sapporo Holdings, up 26 yen, or over 4 percent, to 595 yen. Kirin Holdings rose about 1 percent.

The TSE's Second Section index was up 0.08 point, or 0.00 percent, to 2,227.40 on a volume of 12.57 million shares. On the Osaka Securities Exchange, the near-term September Nikkei 225 index futures contract was unchanged at 10,080.

"Sorry, yes, viktor's hobby. I discovered that when I went to his website. Very cool, as hobbies go. And though viktor is a happily married man of a certain age, I imagine chicks really dig it."

Which segues into a story about groupies at the races.

There was a quite attractive girl in her mid-twenties who used to hang around the pits. The girl had exceptionally long legs and had, unknowingly, picked up the moniker "Dandi Longlegs."

Drag racing is an expensive hobby and most guys who are in it have a lot of dough (that would exclude me) and it was thought that "Dandi" was trying to snag a rich old fart.

One day, between rounds of racing, my crew and my wife and I were sitting around just BSing to kill time. One of my crew spotted Miss "Dandi" and she looked like she was headed our way. So the guy says, "Look out Viktor, she's coming over here to get her hooks into you." All things considered, this was not the right thing to say.

Anyway, the comment got Mrs. Silo's attention. Now, my wife's temper is not merely fiery, it is volcanic. She said, glaring at "Dandi", "If that dirty slut comes over here I will claw her eyes out." Or words to that effect.

I thought the whole situation was hilarious and laughed out loud. This was a mistake. Mrs. Silo gave me her 'when I get you home alone I'm going to cut your nuts off' look and, so, I tried to look suitably contrite and reassured her of my fidelity.

I'm always looking for joke fodder and I thought that this situation was ripe with potential humor so I wrote up a joke called Dandi Longlegs and posted it. Alas, this also was a mistake.

Mrs. Silo reads my blog. We were out socializing one night and the subject of racing came up. Mrs. Silo mentioned that there were a lot of sluts hanging around the pits trying to seduce stupid old farts who were probably too weak to resist their advances. She said, "Viktor thinks it's all a big joke." Then she looks at me and says, "Don't think that I haven't read your "Dandi Longlegs" post. This is nothing to joke about, Viktor, and we will talk about this later."

In my calmest voice, I said, "My dear, I do not consider this a joke, far from it. There is a reasonable explanation for all of this which I will explain to you when we get home."

My mind was racing. I knew I was in deep shit. I thought, "How the fuck am I going to get out of this?" I asked my host if I could use his computer for a few minutes. He agreed and led me to the to it. "Don't tell anyone I'm here," I asked, "I need some privacy." I didn't need the Mrs. to be asking about why I was using the computer.

I went to my site with the intention of deleting the post and telling my wife that she must have read the piece on some other blog. Then my instinct for survival kicked in. "The Mrs. is not going to fall for that shit." it said.

Then there was this flash of inspiration. I would delete my name from the joke and substitute someone else's name. But who?

After seeing my revised post the Mrs. was apologetic (as she should have been). I believe her last words were, "I was sure that I read your name there, Viktor."

Gibbons are masters of their primary mode of locomotion, brachiation, swinging from branch to branch for distances of up to 15 m (50 ft), at speeds as high as 56 km/h (35 mph). They can also make leaps of up to 8 m (27 ft), and walk bipedally with their arms raised for balance. They are the fastest and most agile of all tree-dwelling, non-flying mammals.

I once met a girl from Anchorage by way of Ketchum, Idaho. She'd just gone bungee jumping with her boyfriend. Mentioned how critical it is to know the specifications of the cord and to cut it just right. Seems a fellow had botched the physics, a fatal mistake. The cord stretched just a couple of feet too far.

We were in a position outside of Da Nang. They had us on the perimeter about a couple hundred yards from the platoon, and there wasn't anything but about 20 feet, and 3 strands of barbed wire between us, the trees, and approximately 20,000 Charlies.

I am about to form my own, personal job since you don't see any nice jobs to be found.

Can anybody provide any suggestions or sites about how to find government grant money to begin with my own small business? I have been previously looking via the internet but every single site requires for money and I've been told by the unemployment office to stay away from the sites that ask for cash for grant information because they're rip-offs. I'd personally be sincerely thankful for any help.

Magnificent Ronald and the Founding Fathers of al Qaeda

“These gentlemen are the moral equivalents of America’s founding fathers.” — Ronald Reagan while introducing the Mujahideen leaders to media on the White house lawns (1985). During Reagan’s 8 years in power, the CIA secretly sent billions of dollars of military aid to the mujahedeen in Afghanistan in a US-supported jihad against the Soviet Union. We repeated the insanity with ISIS against Syria.